What Budget Drama’s End May Mean For Key State Services

State Reps. Elise Hall (far right) and Katie Henke (center) applaud as the state House adjourns sine die Friday afternoon.

M. Scott Carter
/ Oklahoma Watch

The 55th session of the Oklahoma Legislature adjourned for the year late Friday afternoon, quietly ending four months’ worth of fighting over money, morals and museums.

For most of the session, a shadow hung over everything: a $611 million budget hole.

Lawmakers chose to adjourn the session a week early, just days after they wrapped up work on the state’s $7.2 billion budget.

The budget cut funding to career and technology education, higher education and transportation. At the same time, more funds were steered to mental health services, public safety and the Oklahoma Health Care Authority. Even with budget hikes, however, key agencies said they would likely have to cut spending.

In a move that surprised many, the Legislature approved a $25 million bond issue for the beleaguered American Indian Cultural Center and Museum in Oklahoma City and a second $25 million bond issue for a museum of popular culture in Tulsa.

Lawmakers also debated issues such as same-sex marriage.

The shrinking pool of money available for appropriation quickly became the session’s central theme.

In February, after the Board of Equalization certified a funding estimate millions below the 2014 prediction, lawmakers went into damage-control mode. They warned agency heads little money would be available for next year.

“We’ve been telling them all session there would be cuts,” said Rep. Dennis Casey, R-Morrison, vice-chairman of the House Appropriations and Budget Committee.

By May, agency directors were convinced.

Still, even after daily caucus meetings, arm-twisting by Republican leaders and urgent phone calls from agency heads, the general appropriations bill just squeaked through the state House, 54-42, on Wednesday.

The bill fared better in the Senate, passing 38-9. Republican lawmakers said the measure protected the state’s K-12 education system from cuts. Democrats said a flat budget was essentially a cut because of student growth and increased health care costs.

Republican Gov. Mary Fallin said the budget “took extraordinary steps” to shield common education from spending cuts. “Under this budget agreement, approximately 51 cents of every dollar appropriated by state government will go toward education,” Fallin said in a written statement.

Oklahoma Treasurer Ken Miller called the use one one-time sources of funding "unsound."

Credit Joe Wertz / StateImpact Oklahoma

The bill did indeed keep common education at the same level as in 2014: about $2.5 billion.

But 49 other state agencies weren’t so lucky, suffering cuts of up to 7.25 percent.

House Budget Chairman, Rep. Earl Sears, R-Bartlesville, said the reductions were necessary because of the sizable budget hole.

“We had to cut spending,” Sears said. “We didn’t have a choice.”

In addition to spending cuts, lawmakers tapped more than $500 million in one-time sources of revenue to balance the budget, a policy State Treasurer Ken Miller described as “unsound.”

Here is a look at how the budget cuts might affect key state services.

Public Health: Providers Get Less

Although the budget injected earmarked an additional $18 million for the Oklahoma Health Care Authority, the agency is still planning to make about $40 million worth of spending cuts.

“It’s pretty likely that the list of cuts will stay intact,” said Nico Gomez, executive director of the Health Care Authority, “but it’s not something that I want to do.”

Those cuts include a 15 percent reduction in reimbursement amounts paid to nurse practitioners, physician assistants, physical therapists and other mid-level medical providers.

Some physician assistants said the cuts would reduce access to health care in rural Oklahoma and cause many physician assistants to drop out of the Medicaid program.

Human Services: Under Court Pressure

House and Senate budget writers committed early to additional funding for the Department of Human Services, but outside that line-item increase, the department’s regular budget was cut by about .05 percent.

For fiscal year 2016, DHS will receive about $16 million extra to fund the Pinnacle Plan, a court-ordered program designed to improve the state’s child welfare system.

Transportation: Cuts Won’t Deter Projects

Lawmakers and county officials fought over funding for road and bridge projects.

After Republican leaders announced they would take almost $72 million from the county improvement roads and bridges programs, county commissioners joined Democrats in opposing the idea.

The cuts remained. Additionally, the Legislature reduced the Oklahoma Department of Transportation’s budget by 6.25 percent, which transportation officials said they could absorb.

“ODOT will carefully keep all scheduled projects in the eight-year construction work plan as well as maintaining funding for maintenance and asset preservation to ensure that the recent investments in the highway system are not allowed to deteriorate like the I-44 Belle Isle bridge,” ODOT spokeswoman Brenda Perry said in an emailed statement to Oklahoma Watch.

Education: Untouched, But Squeezed

Common education was a loser in the 2016 budget even with funding held flat at $2.5 billion, education officials say.

The standstill will leave districts figuring out how to stretch their existing money further and will mean teachers will also go another year without a pay raise.

Oklahoma City Public Schools Superintendent Rob Neu.

Credit Oklahoma Watch / YouTube

Oklahoma City Public Schools expects to add up to 1,000 students next school year, diluting its per-pupil revenue. That’s coupled with increases in overhead costs and other expenses, said Superintendent Rob Neu.

“I appreciate Governor Fallin and the state legislature for not decreasing funding for common education next fiscal year; but flat funding will still have a direct effect on the operations and services the district provides our students,” Neu said in a written statement. “Our student population and district needs continue to grow each year; flat funding for next fiscal year will cost Oklahoma City Public Schools $2.8 million.”

Oklahoma Superintendent of Schools Joy Hofmeister

Credit Joy Hofmeister

Superintendent Joy Hofmeister ran for office last year on a platform calling for hiking teacher pay by $5,000 over five years while adding five days to the school calendar.

That plan was intended to alleviate the state’s teacher shortage, which educators say is fueled partly by low pay.

“A combination of low teacher pay and declining job satisfaction is driving teachers out of the profession or to other states,” Hofmeister said in January when she unveiled the plan. “If we want higher student outcomes, we need to ensure we attract and retain top talent in Oklahoma classrooms.”

She has said she will continue to push for teacher raises.

In 2013-2014, Oklahoma teachers averaged $44,549 in compensation, which includes base pay and medical benefits. That was the lowest pay in the seven-state region and the fourth lowest average in the nation, according to the National Education Association.

At Tulsa Public Schools, the district still has 45 empty teaching positions for the current school year.

CareerTech, which offers vocational training to students at public schools and technology and skills centers, took a 3.5 percent hit, or $4.9 million.

Funds for colleges and universities were effectively cut by 2.4 percent, or $24.1 million. Oklahoma State System of Higher Education Chancellor Glen D. Johnson issued a statement thanking state leaders for preventing a deeper cut by paying debt service on a 2005 bond but did not provide details on how the $24.1 million drop would affect services or tuition and fees

“The State Regents and our 25 public colleges and universities remain committed to providing Oklahoma students an exceptional higher education opportunity at a very affordable cost.”

Credit Oklahoma Department of Corrections

Corrections: More Inmate Beds, No Pay Raises

After declaring last fall that its top priority was to offer pay raises to employees, the Department of Corrections has changed its mind. Instead, the agency has decided to spend its $14 million budget increase on dealing with overcrowded prisons, by increasing capacity.

“I would love for that (pay raises) to be the first priority, but when you’re out of beds, you’re out of beds,” department spokeswoman Terri Watkins said. “We expect a population increase of 1,200 offenders this year, so beds have to be our first priority.”

In October, the state Board of Corrections approved the department’s budget request for an additional $14.5 million to give 7 percent pay raises to correctional officers and 5 percent raises to other employees. The raises were listed as the top priority in the budget request, which went to the Legislature.

The request also sought an additional $26.2 million to increase inmate beds by contracting with private prisons, county jails and halfway houses. That was the second priority.

Early in the legislative session, Watkins told a House committee that the corrections system was facing shortages of officers, mental health personnel and support staff, with only 68 percent of authorized positions filled.

Prisons also were overcrowded. According to the department, the system is at 112 percent capacity.

Sean Wallace, executive director of Oklahoma Corrections Professionals, said the change in funding priorities could further weaken employee morale.

“I was afraid of that,” Wallace said. “That would be extremely disappointing to a lot of people, if we’re going to spend that money on private prison beds. (Employee) morale is in a bad place. I don’t know how it could possibly get worse.”

Watkins said a final decision on how to spend the $14 million will be made over the next two weeks.

“We start putting pencil to paper next week to see where the immediate needs are,” Watkins said.

Oklahoma Watch is a nonprofit journalism organization that produces in-depth and investigative content on a range of public-policy issues facing the state. For more Oklahoma Watch content, go to www.oklahomawatch.org.

Mental Health: Loss of Services?

If predictions hold true, thousands of fewer people will receive mental health and substance abuse services from the state next year.

But the Oklahoma Department of Mental Health and Substance Abuse Services is still mulling its choices.

It must determine how it will spend the $2 million in additional funding it received for fiscal 2016. The funds could go toward the agency’s core services, special programs such as drug courts or Medicaid matching funds for behavioral health services.

“This was a difficult year and many tough decisions had to be made,” Commissioner Terri White said. “We will wait for the budget to be finalized before speculating on any modification to services. We are hopeful that we will be able to minimize any negative impact for those Oklahomans who are the most seriously ill.”

In a presentation to a Senate committee earlier this year, White said the department needed $10 million more or it would have to cut services.

She presented several scenarios.

An increase of $5 million would result in 7,361 Oklahomans losing all services, she said. To maintain services at the current level would require a $20 million hike.

In 2012, the department was given control of Medicaid funds for behavioral health and substance abuse services. Upcoming reductions in the federal share of Medicaid funding would require the state to pick up the difference or cut services.

The biggest part of the agency’s budget request, $5.7 million, was to make up for the reduced federal funding for Medicaid. The second biggest part was $3.5 million to fund services for growing numbers of people receiving clients behavioral health services.

After legislative leaders announced the budget deal, White said the department is grateful for the $2 million increase.

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A top Oklahoma health official is warning that the budget crunch may force the Oklahoma Health Care Authority to cut payments to mid-level medical providers such as nurse practitioners and physician assistants, which providers say could lead to the closing of rural clinics.

Facing a $611 million budget gap, state leaders say most agencies will see spending cuts, or at best, a flat budget. But even with a flat budget, Health Care Authority officials said, many low-income residents could see a reduction in health care access and services.

Budget documents released by the Authority indicate the agency is proposing more than $40 million in budget reductions for the 2016 fiscal year. Those cuts range from $2.9 million in administrative cuts to a $5.2 million, or 15 percent, reduction in reimbursement amounts paid to nurse practitioners, physician assistants, physical therapists and other mid-level providers.

Doctors could see reimbursement rate cuts of about 2 percent, lawmakers said.

The reductions would lower fee-for-service payments to 85 percent of the Authority’s physician fee schedule.

With the state facing a $611 million budget hole, more than 90 Oklahoma businesses, foundations and nonprofit agencies are asking the governor and Republican legislative leaders to halt a scheduled income tax cut.

House lawmakers approved a $7.1 billion budget late Wednesday night just one day after unveiling the plan. It now goes to the Senate on a 54-42 vote that saw several Republicans voting against the bill along with the House’s Democratic minority. The upper chamber is expected to consider the budget Thursday.

A little over two weeks before the constitutionally required deadline for Oklahoma lawmakers to wrap up the legislative session, Gov. Mary Fallin and leaders of the House and Senate announced a budget deal Tuesday afternoon.

The $7.1 billion budget is just over one percent less than the current fiscal year, and closes a $611 million shortfall by tapping the Rainy Day Fund, state agency revolving accounts, and the Unclaimed Property Fund.

State lawmakers unveiled a fiscal year 2016 budget Tuesday that would keep funding for common education flat but cut appropriations for colleges and universities by $24.1 million.

Oklahoma's common education system would receive $2.484 billion, the same amount it received in 2015. The state's CareerTech education system would see a 3.5 percent decrease in its budget, about $4.8 million.

Oklahoma lawmakers are looking at taking between $100 and $140 million from the state's "rainy day fund" and could tap agency revolving funds for more than $100 million to help backfill the state's budget hole, a source close to Governor Mary Fallin's office said Wednesday.

Oklahoma is facing a $611.3 million budget gap.

"Everything is very fluid right now, but it looks like revolving funds and 'rainy day' money will be used," said the source, who asked to remain unidentified.